Iran Links Continued Oil Exports To Keeping The Nuclear Deal

An oil tanker is seen off the port of Bandar Abbas, southern Iran. File photo

Share

Iran Links Continued Oil Exports To Keeping The Nuclear Deal

share

Iran’s Oil Minister Bijan Zanganeh says his country’s Foreign Ministry officials are not happy with the details of the package of economic measures offered to Tehran in order to make sure that Iran stays in the nuclear deal with the West.

Zanganeh, however, said he has not had a chance yet to take a closer look at the package.

On July 6, Iran’s President Hassan Rouhani told German and French leaders that “the package does not meet Iran’s demands.”

Iranian State TV, IRIB (The Islamic Republic of Iran’s Broadcasting organization), reported on July 6 that the Islamic Republic of Iran expects EU to “fulfil its responsibility” in preserving the deal with Tehran.

Iranian media earlier reported that Tehran had suggested Europe should guarantee the purchase of one million barrel of Iranian crude oil per day, although this has not been confirmed by EU or Iranian officials.

Iranian Oil Minister Bijan Zanganeh arrives at his hotel ahead of a meeting of OPEC oil ministers in Vienna, June 19, 2018

A guarantee for keeping Iran’s oil sales going is one of the conditions Iran’s Supreme Leader Ayatollah Ali Khamenei has set in order to keep Iran in the nuclear deal with the West, aka the Joint Comprehensive Plan of Action (JCPOA).

The United States’ withdrew from the JCPOA in May and is about to renew economic sanctions against Iran.

Iran used to export between 2.2 to 2.6 million barrels of crude oil per day before EU and US nuclear sanctions began in 2011, however, it dropped to as low as 1.1 million barrels in 2014. The figure rose higher after Iran and the West agreed on the JCPOA. Iran’s oil export in 2017 reached 2.65 million barrels a day.

Some one third of the output went to Europe and the remainder to Asian customers including China, India, South Korea and Japan.

The new round of US oil sanctions against Iran are expected to start in November.

President Donald Trump has called on Saudi Arabia to increase its output by two million barrels per day to cope with possible shortages in the market, but some doubt KSA’s ability to boost its current output to 12 million barrels per day.

In the meantime, Bank of America Merrill Lynch has said that if the United States manages to stop Iran’s oil output altogether by November, the price of oil in the international markets would reach over 120 dollars per barrel.

In May, the same group was forecasting a maximum price of $100 per barrel because of renewed U.S. sanctions on Iran, but the forecast now has gone to a higher price level.

The bank of America Merrill Lynch report says if Iran stops selling oil as a result of US policies, Tehran will increase its floating reserves.

CNBC Analysts have said they doubt that the US can even halve Iran’s oil output, which is currently at 2.4 million barrels per day. Nevertheless, other analysts say this could be feasible, thanks to the United States Officials’ lobbying with their counterparts in other countries.

However, the report says based on previous experiences about sanctions, the US measures previously reduced Iran’s oil output by 1.2 million barrels per day.

The US might be happy with a 500,000 barrel per day reduction in Iran’s oil output under the circumstances, as global oil reserves are experiencing a daunting shortage.